Employment Law Daily NLRB's Specialty Healthcare approach upheld; Macy's microunit not clearly inappropriate, 5th Circuit finds
Tuesday, June 7, 2016

NLRB's Specialty Healthcare approach upheld; Macy's microunit not clearly inappropriate, 5th Circuit finds

By Ronald Miller, J.D. On review of an NLRB order finding that a bargaining unit consisting solely of cosmetics and fragrances employees at a Macy’s department store was appropriate and that the employer unlawfully refused to bargain, the Fifth Circuit denied the employer’s petition for review and granted enforcement to the Board. After first concluding that the standard articulated by the Board in Specialty Healthcare and Rehabilitation Center of Mobile did not violate the NLRA, the appeals court concluded that Macy’s failed to establish that the unit was clearly not appropriate (Macy’s, Inc. v. NLRB, June 2, 2016, Dennis, J.). After the NLRB certified a bargaining unit consisting of all cosmetics and fragrances employees at a Macy’s department store, the employer refused to bargain with the union, and the Board found Macy’s violated NLRA, Section 8(a()(5). Macy’s petitioned for review, arguing that the unit was clearly not appropriate, that the Board applied a test that cannot be squared with the NLRA or prior Board precedent governing initial unit determinations, and that, even under Specialty Healthcare, the Board approved an inappropriate unit. Cosmetics and fragrances unit. The Macy’s store was divided into 11 primary sales departments, including cosmetics and fragrances. The cosmetics and fragrances department was located in two areas within the store. Each of the two selling areas was spatially distinct from the other primary sales departments. Cosmetics beauty advisors are specifically assigned to one of eight counters in the first floor cosmetics area. They typically sold only one vendor’s products. Fragrances beauty advisors are assigned to either the men’s or the women’s fragrances counter, and they sell all available men’s or women’s products, regardless of the vendor. Although cosmetics and fragrances employees occasionally assist other departments with inventory, the record is clear that cosmetics and fragrances employees are never asked to sell in other departments, nor are other selling employees asked to sell in the cosmetics and fragrances department. Cosmetics and fragrances counters each have a counter manager. The department also has seven on-call employees who may work at any of the ten counters. There is no indication that any other primary sales department had the equivalent of counter managers, and the record was unclear as to whether the other primary sales departments have the equivalent of on-call employees. Most of the other departments had their own sales manager. Cosmetics and fragrances employees and other selling employees have some incidental contact, including storewide inventory and daily “rallies” with store management. Although compensation differs, all selling employees enjoy the same benefits, are subject to the same employee handbook, and have access to the same in-store dispute resolution program. All selling employees are evaluated based on the same criteria. Finally, all selling employees are coached through the same program designed to improve selling techniques and product knowledge. “Overwhelming community of interest.” In making its determination as to the appropriateness of the bargaining unit, the Board applied the “overwhelming community of interest” test set forth in Specialty Healthcare. In a five-member decision, with one member dissenting, the Board concluded that the employees in the petitioned-for unit were a readily identifiable group who shared a community of interest, and that Macy’s had not met its burden of demonstrating that the other selling and non-selling employees it sought to include in the unit shared an overwhelming community of interest with the petitioned-for employees so as to require their inclusion in the unit. In Specialty Healthcare, the Board clarified the principles that apply in cases, such as this one, where a party contends that the smallest appropriate bargaining unit must include additional employees beyond those in the petitioned-for unit. If the Board determines that the smaller unit is readily identifiable as a group—based on job classifications, departments, functions, work locations, skills, or similar factors—and the employees in the smaller unit share a community of interest according to the traditional criteria, the Board will find the petitioned-for unit to be an appropriate unit, despite a contention that employees in the unit could be placed in a larger unit. Homogenous work force? Macy’s argued that the unit approved by the Board was clearly not appropriate because all sales employees at the store represented “a homogenous work force.” Contrary to Macy’s claim that all employees “collaborate in the same integrated workplace,” the Board found “little evidence of temporary interchange between the petitioned-for employees and other selling employees.” Thus, although the unit argued for by Macy’s may have also been “an appropriate bargaining unit,” the appeals court could not say that the one approved by the NLRB was “clearly not appropriate” based on the employees’ “community of interests.” Board’s test upheld. Next, the court examined Macy’s contention that the Board’s “overwhelming community of interest” test cannot be squared with the NLRA or prior Board precedent governing initial unit determinations. Again, the appeals court disagreed with Macy’s. The Board has authority to depart from precedent and change its rules and standards as long as it “set[s] forth clearly the reasons for its new approach.” However, where the Board has not departed from a “uniform rule,” the Board need not give a detailed rationale for its chosen approach. Here, the Fifth Circuit agreed with its sister circuits, including the Fourth, and Eighth Circuits, that in Specialty Healthcare the Board “clarified—rather than overhauled—its unit-determination analysis.” The standard articulated by the Board in Specialty Healthcare does not violate the NLRA, declared the appeals court. The Board did not depart from a uniform rule by applying it, and its basis and application were cogently explained. Further, the standard was not improperly imported from another context, and it was not adopted in violation of the APA. Finally, the application of the standard in the retail context was not inconsistent with prior Board decisions. Therefore, the Fifth Circuit declined to reject the Specialty Healthcare standard and held that the Board did not abuse its discretion by articulating and applying that standard in this case. Because the NLRB reasonably concluded that the bargaining unit of cosmetics and fragrances employees at the Macy’s store was appropriate, the appeals court enforced the Board’s order.

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